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As TARP nears it's end on Dec. 31, discussions about extending it -- or killing it -- are flooding the halls of Congress and the White House. Treasury Secretary Timothy Geithner can ask to extend TARP until October 2010, but he'll do so with a lot of objection from members of Congress. In fact Republicans are so disappointed in Geithner's performance that they're calling for his resignation. Now, the Federal Reserve is asking the big banks that were part of the stress tests to submit plans for repaying TARP, according to a report from Bloomberg.

These banks include: Bank of America (BAC), Citigroup (C), Fifth Third Bancorp (FITB), GMAC, KeyCorp (KEY), PNC Financial Services (PNC), Regions Financial Corp. (RF), SunTrust Banks (STI) and Wells Fargo (WFC). All either declined to comment to Bloomberg or didn't call back. These nine banks received about $142 billion of the $700 billion bailout.As part of these payback plans, the banks will have to show that they can raise money from private investors without government backing. They'll also have to show that, even without the TARP money, they can meet stringent capital requirements that the government put in place after the stress tests last spring.

Sanford Bernstein analyst John McDonald told the Charlotte Observer that BoA had met the stress test mandates by raising $40 billion, which is $6 billion more than required. It also issued debt with help from the government and has stopped borrowing from the two Federal Reserve programs. It has also raised its liquidity significantly. At the end of September, BoA held $152 billion in cash and cash equivalents versus just $39 billion during the same period last year.
Direct -- and Indirect -- Costs

Mark Zandi, chief economist and co-founder of Moody's Economy.com, testified at the TARP hearings last week that he expects the program to ultimately cost taxpayers about $100 billion to $150 billion, far less than the original $700 billion price tag. He expects the most costly part of TARP will be the bailout of the automotive industry, which he thinks will total $50 billion. He put the tab for AIG at up to $35 billion.

Zandi also notes that part of the TARP price tag will be $30 billion to support the housing industry. In addition, the Capital Purchase Program, which provided funds to financial institutions, will ultimately cost between $10 billion and $15 billion, while other TARP credit programs will reach costs of about $10 billion. He also thinks about $5 billion will be lost on small-business lending.

But that's just a very small piece of what Zandi estimates will be the total direct costs of the financial panic and the great recession. He expects that figure to hit $1.2 trillion, and he included a table in his testimony to back up that number. Most of the costs beyond TARP relate to the fiscal stimulus packages of early 2008 (Bush administration) and early 2009 (Obama administration), which together will cost the taxpayers $900 billion.

Add to that the nearly $750 billion in indirect costs resulting from the weaker economy, says Zandi, and the loss from this recession reaches nearly $2 trillion, or 14% of GDP. The savings and loan crisis of the early 1990s had a much smaller price tag -- $350 billion in today's dollars, which was equal to 6% of GDP at that time.

Image Change?

TARP currently has about $140 billion still uncommitted and even more unspent -- $300 billion. Geithner has made some noises about wanting to extend the program. If that doesn't happen, he wants the unspent funds to be used for paying down the debt and not for other pet projects of Congress. TARP remains unpopular with the public because of the perception that it bails out Wall Street and leaves out Main Street. Many Americans are clearly angry about the generous compensation packages that Wall Street firms continue to pay their executives.

Geithner is trying to change that image by directing the remaining funds to help small businesses, community banks and struggling homeowners. In fact, the Obama administration is trying to go back to using the bill's official name, the Emergency Economic Stabilization Act, rather than TARP, to channel anger away from continuing the program.

Asking the big banks to put plans on paper to repay the TARP funds may help to stem public sentiment against TARP, but I don't think it will help to win support for its continuation. As long as the big banks continue to pay huge compensation packages and Main Street believes it got shortchanged while Wall Street got help, extending TARP won't get much support.

Lita Epstein has written more than 25 books including Reading Financial Reports for Dummies and Trading for Dummies.